DBRS reaffirms A rating for Maltese economy, notes lack of exit strategy for energy subsidies
While noting that government plans to decrease the country’s deficit, DBRS noted that this is based on government's expectation that a decrease in global energy prices will reduce the fiscal cost of untargeted energy subsidies
International credit rating agency Morningstar DBRS has reaffirmed Malta’s A (high) credit rating, maintaining a stable outlook.
The credit agency’s report highlighted that Malta's economic growth reached 6% year-on-year in 2024, fueled by strong domestic demand, large foreign labour inflows, and ongoing government support. While growth is expected to decrease to 3.5% by 2025, it is still projected to outpace a number EU member states.
DBRS has also raised concerns over Malta's fiscal deficit, which reached 4.6% of GDP in 2023, higher than the Euro area average of 3.6%.
While noting that government plans to decrease the country’s deficit, DBRS noted that this “is not based on a clear exit strategy for the untargeted energy subsidies but rather on the government's expectation that a decrease in global energy prices will reduce the fiscal cost of subsidies.”
On governance, DBRS highlighted that while indicators are broadly in line with EU averages, concerns about corruption control remain.
Looking forward, the agency said that improvements in public debt management, stronger fiscal resilience, or further advancements in governance could lead to a rating upgrade.
On the other hand, a downgrade could be warranted in the event of significant deterioration in fiscal performance, weak economic growth, or setbacks in Malta's financial crime and institutional reforms.
On Saturday, Prime Minister Robert Abela welcomed the rating, saying that the economy’s growth continues to defy experts’ expectations.
Malta's A high rating has just been confirmed by DBRS on account of our country's economy continuing to grow much faster than our peers, defying experts' expectations once again. They believe our deficit and debt will decrease on the back of our stable policy environment. - RA
— Robert Abela (@RobertAbela_MT) October 12, 2024
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